Hi All,

Thought I'd add to the chorus of indebted college graduates looking for advice here.

I graduated from college in 2006. I have about $32K in Private Loans and $14K in Federal loans, consolidated with SalliMae.

The payments for my private loans have been $170 a month, which have been paid for the last few years out of an inheritance. The payment for my federal loans have been $60 a month-- pretty easy.

Next month my payments on the Federal Loans jump up to $150-- not so easy. I live as frugally as is possible in NYC and am struggling. I am thinking of changing repayment plans (currently I'm in Grad Choice 2, for what it's worth). Does this seem like a stupid idea? I want some feedback from folks who have changed repayment plans with Sallie Mae. I understand that I would be extending the overall "life" of my loan, but my income simply cannot make room for these higher payments. Also, in the next year my inheritance will run out, so I will have to renegotiate the payment plan for my private consolidated loans as well (currently in Immediate Repayment plan).

Because of the private loans I have, I realize that I'm effectively screwed, since I can never sell the loans to another company.
How are other folks are managing a mix of private and federal loans, specifically with SallieMae?



Max

maybe moving out of nyc could help, living there doesnt lead to cheap living no matter how you look at it

also, what are you doing for work? these payments seem really low and if you cant keep up with them u may need to pick up more hours at a part-time job

I'm going to assume that you're truly living as frugally as possible, if a jump of $90 is going to break you then you have an income problem, and need to find additional ways to generate revenue. How many hours are you working a week? Are you underemployed?

Thanks for the input. Of course I understand that income is central to paying down debt. I hadn't included more information about myself but I am glad to if it'll help me get some thoughtful responses. I pay $700 a month in rent (plus about $50 utilities) and work full time at a law firm in an administrative position, I make $24K a year before taxes.

Salliemae has said that my options are to pay interest only on my loans (which would be $55 a month for either 12-36 months) or to switch to an income sensitive repayment plan (which would be $84 a month). Obviously the income sensitive repayment plan pays off principal while the interest-only does not. Is this a very simple question? I'm trying to debate whether saving $30 a month is really worth deferring reality for another couple of years...

I would recommend the $84 option so that you can pay off principal gradually. It will at least allow you to make progress toward a goal as opposed to just continuing to defer it. Will your degree allow you to find another job with higher pay by next year when your private consolidated loan would otherwise need to be renegotiated due to your inheritance running out? When we think of New York, we immediately think of a high cost of living ... and $24k gross income per year seems like it would barely pay for a standard frugal lifestyle as you say. Add in the loan repayments, and that's not much to bank on. It sounds like you've been using your inheritance as a buffer to endure a bad overall financial situation ... are you going to be left with no emergency fund and living paycheck-to-paycheck when it runs out? I have to agree with the other responses that you either need to find a better-paying job or a secondary part-time job (or sign up with various staffing agencies for short stints of work at a time on the weekends or evenings or whatever) to increase your income. It would help to get an idea of the cost of living if you posted other items in your budget... but I think it's the earnings side of the equation that needs to change dramatically for your situation to improve. What is your degree in? Can you leverage a career placement service at your college so that they can assist you in finding another position in your field of study?

I am going thure the same thing but not as much (around 10k) payments start 4-1-09 I might try for the income pyment plan my self
thanks